United States Oil (USO) Iran-pegged crude supply worries persist
U.S. oil prices finished lower on Thursday, and Brent prices gave up earlier gains to settle lower for the first time in five sessions, with both crude benchmarks marking a retreat from the nearly six-month highs they reached earlier this week.
Traders continued to consider the likelihood that major producers will increase supply in response to tougher U.S. action against Iran’s oil market.
“After a pretty slow and drifty day in the energy market, volatility spiked in the final half-hour of the session but without a clear catalyst for the move,” Tyler Richey, co-editor of the Sevens Report, told MarketWatch.
“The price action was consistent with profit-taking by large funds who tend to place their trades into the settlement,” he said. “Profit-taking makes sense given the fact that the [Energy Information Administration] report on Wednesday revealed a subtle but notable, bearish shift in fundamental trends,” with U.S. crude supplies at an 18-month high, he said. “This helps explain why WTI underperformed into the close.”
U.S.-based West Texas Intermediate crude for June delivery CLM9, -0.57% fell 68 cents, or 1%, to settle at $65.21 a barrel on the New York Mercantile Exchange after a loss of 0.6% Wednesday. WTI on Tuesday scratched $66.30, the highest settlement for a front-month contract since Oct. 29, FactSet data show.
Overall, the bias in prices is: Upwards.
Note: this chart shows extraordinary price action to the upside.
By the way, prices are vulnerable to a correction towards 12.53.
The projected upper bound is: 14.04.
The projected lower bound is: 13.12.
The projected closing price is: 13.58.
A big black candle occurred. This is bearish, as prices closed significantly lower than they opened. If the candle appears when prices are “high,” it may be the first sign of a top. If it occurs when prices are confronting an overhead resistance area (e.g., a moving average, trendline, or price resistance level), the long black candle adds credibility to the resistance. Similarly, if the candle appears as prices break below a support area, the long black candle confirms the failure of the support area.
During the past 10 bars, there have been 5 white candles and 5 black candles. During the past 50 bars, there have been 26 white candles and 23 black candles for a net of 3 white candles.
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 71.3925. This is not an overbought or oversold reading. The last signal was a sell 0 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 64.56. This is not a topping or bottoming area. However, the RSI just crossed below 70 from a topping formation. This is a bearish sign. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 0 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 75. This is not a topping or bottoming area. The last signal was a sell 0 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 0 period(s) ago.
Rex Takasugi – TD Profile
UNTD ST OIL FUND closed down -0.150 at 13.530. Volume was 28% below average (neutral) and Bollinger Bands were 7% narrower than normal.
Open High Low Close Volume___
13.690 13.725 13.500 13.530 17,547,298
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 13.44 12.46 12.85
Volatility: 21 24 38
Volume: 16,604,389 19,874,836 24,905,038
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
UNTD ST OIL FUND is currently 5.3% above its 200-period moving average and is in an upward trend. Volatility is relatively normal as compared to the average volatility over the last 10 periods. Our volume indicators reflect volume flowing into and out of USO at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bullish on USO and have had this outlook for the last 34 periods. our momentum oscillator has set a new 14-period low while the security price has not. This is a bearish divergence.
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